Marissa Plescia
More research is building against pharmacy benefit managers (PBMs).
The American Medical Association (AMA) released a report on Monday that shows there is low competition among PBMs and significant vertical integration with health insurers. It comes as Congress is considering action against PBMs and the Federal Trade Commission is investigating them.
“The call for increased regulatory oversight of PBM business practices is overwhelmingly welcomed by physicians as a check against possible anticompetitive harm resulting from low competition and high vertical integration in the PBM industry,” said AMA President Bruce A. Scott, MD, in a statement. “The findings from the new AMA analysis warrant attention as Congress and the administration continue their work to protect patients and ensure prescription drugs remain affordable and accessible. The AMA urges careful monitoring, and intervention when needed, of both horizontal and vertical integration to ensure competition in PBM and health insurance markets.”
The AMA’s analysis relied on 2022 data of commercial and Medicare Part D prescription drug plan enrollees. It found that the four largest PBMs have a 70% market share of the PBM market. When looking at rebate negotiation, CVS Health has a 21.3% market share, OptumRx has 20.8%, Express Scripts has 17.1% and Prime Therapeutics has 10.3%.
In addition, the report revealed that 82% of PBM markets at the prescription drug plan region level are extremely concentrated.
The analysis also showed that PBMs have high vertical integration with health insurance companies. Nationally, insurers that are vertically integrated with a PBM cover 72% of commercial or Medicare Part D enrollees. When looking at the prescription drug plan region level, about 70% of people are covered by a payer vertically integrated with a PBM. However, this varies by region, as some are nearly entirely vertically integrated and some have minimal vertical integration.
The AMA also details the market shares of the 10 largest prescription drug plan insurers at the national level, breaking them down by commercial, Medicare Advantage prescription drug plan, and stand alone prescription drug plan markets. UnitedHealth Group leads in commercial and Medicare Advantage prescription drug plan markets, with 13% and 28.2% shares, respectively. CVS Health is the top insurer in the standalone prescription drug plan market with a 25.6% share.
The Pharmaceutical Care Management Association (PCMA), an advocacy organization for PBMs, had issues with the AMA’s methodology for the report.
“Unfortunately, by focusing on PBMs in the Medicare market, AMA’s methodology doesn’t support the report’s conclusion,” said Greg Lopes, spokesperson for PCMA, in an email. “More than 70 full-service PBMs operate across health care markets. It’s unfair to assume the AMA presents an accurate depiction of the entire health care system. The bottom line is that the PBM marketplace is dynamic, diverse, and continues to grow. PBMs vary in size, geographic footprint, and service offerings, which creates a marketplace with a variety of options for health insurers, employers, labor unions, government programs, and other health plan sponsors.”
In July, the FTC also released findings on PBMs through an interim report. It explained that after decades of mergers and acquisitions, the PBM space has become extremely concentrated. It stated that the six largest PBMs — CVS Caremark, Express Scripts, Optum Rx, Humana Pharmacy Solutions, MedImpact and Prime Therapeutics — manage about 95% of all prescriptions filled in the U.S.
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